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Terms of Trade and Factor Commitments in Agriculture

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  • Fohlin, Caroline
  • Robinson, Sherman
  • Schluter, Gerald E.

Abstract

US agricultural economic growth in this century has been characterized by a slow rise in the demand for food and faster growth in farm output as against nonfarm productivity. In such an environment, one expects the size of the farm sector to decline as a share of the rest of the economy. What is not so clear is the effectiveness of the price system in signaling the appropriate resource adjustments or of the resource market in responding to available signals. We examine four terms-of-trade measures conceptually and, since 1929, empirically. We find that even distortions from farm programs have not offset the long-term trend of declining terms of trade. Labor and capital markets respond, albeit imperfectly and slowly.

Suggested Citation

  • Fohlin, Caroline & Robinson, Sherman & Schluter, Gerald E., 1989. "Terms of Trade and Factor Commitments in Agriculture," Journal of Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, vol. 41(4), pages 1-6.
    • Handle: RePEc:ags:uersja:138831
    DOI: 10.22004/ag.econ.138831
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    References listed on IDEAS

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    1. Kym Anderson, 1987. "On Why Agriculture Declines with Economic Growth," Agricultural Economics, International Association of Agricultural Economists, vol. 1(3), pages 195-207, October.
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    Cited by:

    1. Hanson, Kenneth & Robinson, Sherman & Tokarick, Stephen, 1990. "U.S. Adjustment in the 1990's: A CGE Analysis of Alternative Trade Strategies," Staff Reports 278325, United States Department of Agriculture, Economic Research Service.
    2. Dote, Grace, 1991. "Economic Research Of Interest To Agriculture, 1988-1990," Economic Research of Interest to Agriculture 7326, University of California, Berkeley, Department of Agricultural and Resource Economics.
    3. Hanson, Kenneth & Robinson, Sherman & Tokarick, Stephen, 1989. "United States Adjustment in the 1990s: A CGE Anaylsis of Alternative Trade Strategies," CUDARE Working Papers 198496, University of California, Berkeley, Department of Agricultural and Resource Economics.

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